SAN FRANCISCO - California's State Public Works Board is planning to sell $236 million of lease revenue bonds next week to refund outstanding debt.

The deal, expected to price on Nov. 6, will be structured as serial bonds, secured by a pledge of base rental payments made by the participating departments and agencies.

These include the Department of Corrections and Rehabilitation, the Department of Technology, and the Department of State Hospitals.

The bonds are rated A1 by Moody's Investors Service and A-minus by Standard & Poor's and Fitch Ratings. Each agency's rating is one notch below their rating on the state's GO bonds.

Moody's and Fitch give stable outlooks, while Standard & Poor's has a positive outlook.

"These ratings are based on our view of the SPWB's or other authorities' special obligations secured by the participating agencies' annual lease payments for use of the various assets under each lease agreement," said Standard & Poor's credit analyst David Hitchcock.

The agency's positive outlook reflects its outlook on the state's GO bonds, which carry an A rating.

Moody's also noted the strong legal mechanisms for lease payments as a credit strength.

Moody's gives the state a Aa3 rating and Fitch gives an A rating.

The SPWB was created in 1946 to acquire, construct, improve, and operate public buildings and related facilities for state agencies. Since 1985, it has also been active in the construction of facilities for purposes including higher education and corrections.

According to Standard & Poor's, the SPWB has approximately $11.2 billion of lease revenue bonds and other state facility lease revenue bond issues outstanding, as of Oct. 1.

Next week's deal will be priced by JPMorgan. Stradling Yocca Carlson & Rauth is bond counsel and KNN Public Finance is financial advisor.

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